Market Intelligence: Piezo Inkjet Printhead Market Continues Robust Growth

Piezo inkjet printhead technology is the enabling technology force that has made many of the new, fast growing digital printing solutions possible. It is the engine that propels wide format printers, ultra-high speed production document printers, digital textile printers, label printers, and many other often decorative or manufacturing related applications. For the purposes of this report we are excluding thermal inkjet and continuous inkjet printheads

With its origins as a component for consumer inkjet printers, inkjet printhead technology has evolved over the last decade into a market of its own right. Piezo inkjet print heads in particular have attracted the interests of a group of mainly dedicated divisions of larger manufacturers. Epson, FujiFilm, KonicaMinolta, Kyocera, Ricoh, Seiko Instruments, ToshibaTEC and others all offer their piezo inkjet printheads for sale to other companies whom integrate them into mainly industrial printers. Xaar is the sole commercially active publicly traded independent piezo printhead manufacturer left in the market. Brother, Canon/Océ, Hewlett-Packard, and Xerox also manufacture piezo inkjet heads, but mainly for their own branded products. There are several other manufacturers trying to commercially develop inkjet printhead technologies (not all piezo), including MemJet, ToneJet, PicoJet, and others, but it is a race against time as the development cycles tend to be far longer than most can imagine.

The total investment sunk into developing industrial piezo inkjet printhead technology over the last decade now totals well over $1 billion. This economic hurdle (along with time/experience) has created a high hurdle for now potential entrants, including some of the internally-focused manufacturers of piezo inkjet heads who face the difficult decisions of determining whether a better return-on-investment is offered by purchasing inkjet heads from the dedicated divisions of large manufacturers (with whom they often compete in other segments of the digital printer market).

But the lure of control and revenue has maintained a steady group of players, leading to acquisitions but few exits from this market even during the economic recessions that occurred during the last decade. Averaged over 10 years, revenues for dedicated divisions selling piezo printhead and the sole independent manufacturer, from piezo inkjet heads; royalties, licensing, and other associated income streams (test kits, integration services, deposition printers, etc.) have grown about 14 percent annually. There are very few other segments within the printer market that have this type of growth record.

With piezo inkjet printheads on average accounting for 10 precent of the total cost of the print system sold, this means that they generated over $5 billion in revenue for printer hardware manufacturers (and that excludes revenue from consumables, which when included would nearly double this number). Despite the success of piezo inkjet head technology, it is not immune from economic recessions. In fact, because the piezo inkjet printheads are incorporated into products typically priced from $30,000 to $5,000,000 demand for these high-cost capital goods fell faster than the economy in general during the 2008-2009 recession, with unit volumes plummeting about 30 percent. At the same time, recovery has also been faster than the general economy, with unit volumes growing about 26 percent from 2009 to 2010.

Unit volumes of piezo inkjet heads sold is a favorite but flawed measure of gauging the health of this segment of the industry. Up until about 2007, most printheads sold were less than one-inch in print width and typically featured between 128 to 512 nozzles per printhead. While there were differences in performance and cost, one could relatively contrast and compare manufacturers against each other. During the last four years however we've seen a breakthrough in larger print swath and nozzle inkjet head. Print heads of 4.25-inches wide with over 2,500 nozzles are now commonplace. This means that in many instances fewer inkjet printheads are now required to obtain even higher performance than before. This has caused the units of printheads required to decrease dramatically. At the same time, we're also seeing demand for ever higher performance single-pass (fixed array) inkjet printing systems, many of whom require 30 to 500 printheads or more compared to a norm of typically 20 printheads or less. The growth of single-pass systems has negated the opposing force of requiring fewer printheads in mainstream printer hardware, and have kept the printhead unit volume growing.

During 2009 many piezo inkjet head manufacturers idled capacity, but in 2010 most were having to run multiple shifts to keep up with volume demands. With many of the print heads manufactured in Japan there was some concern about supply chain troubles due to the March 2011 Tsunami and related disasters, but so far there does not appear to be any ramifications for inkjet printhead delivery.

Another way for looking at the health of the piezo inkjet printhead market is by comparing the weighted average selling price per printhead over time. Until the wide swath printheads emerged, competitive market forces were causing a decline in prices per printhead. The wider print swath inkjet heads have reversed this course, and are projected to continue to drive up the weighted average selling price as the growth of single-pass printing systems continuous to outpace serial-based printing systems.

The application usage of piezo inkjet printheads has not changed dramatically in terms of unit volumes. While there has been rapid expansion of usage, the share of printheads consumed by wide format graphics printers has remained stable due to the increasing number of printheads per printer and continuing growth in the UV-curable printer segment of the market. Wide format graphics printers have consumed approximately 63 percent of all piezo inkjet printheads during the last five years, a share that is not projected to change dramatically.

Growing faster than wide format graphics printers are two single-pass printhead markets: what we've called publishing (or production printers) and decorative printing (mainly ceramics at this time). Their share growth has come at the expense of declining use of piezo printheads for imprinting applications.

IT Strategies estimates the next rapid growing usage for single-pass inkjet heads will be in digital textile printing. Much innovation is yet required in this area; however the economic level of interest driven by using digital printing to compress the supply chain of retail apparel sales is merging with piezo inkjets enhancements in productivity and performance.

Looking Ahead

There is no foreseeable flattening of demand for piezo inkjet printheads. Continuing interest in digitalization of printing technology to automate and compress turnaround cycles at production volume levels with ink chemistries that match the substrates required cannot be matched by another other commercially available digital printing technology.

This doesn't mean that it will be an easy market to participate in as the demands for improved economies of scale, faster performance, and cost of engineering the printheads to match specific application requirements will continue to increase.

Dedicated divisions of large manufacturers who currently supply inkjet heads mainly to other OEMs will target their next generation of piezo printheads for internal usage. They will focus on single-pass printing technology, targeting sheet-fed graphics production printers. They will concurrently continue to supply inkjet heads for those applications where the technology and distribution hurdles are beyond their reach, including most decorative applications (ceramics, textile printing, 3D printing, etc.).

At the same time internal usage focused manufacturers will continue to evaluate whether it makes economic sense to also supply external OEMs, either for economies of scale or profit reasons. The hurdle is putting in place a support infrastructure, something that independent Xaar has become exceedingly skilled at.

The printheads that are still under development will likely continue needing more time to reach commercialization. Historically it has taken 5 years to reach the stage of printhead design, an additional 5 years to perfect manufacturing, and 5 more to reach true volume commercialization. Most of the under development heads have yet to reach the 8-year mark.

Meanwhile, the established manufacturers continue to invest more resources into next generation design and manufacturing, leveraging either an incumbent customer base for future demand and/or leveraging parent company resources betting on branded printing hardware solutions that are in development. Investments required for the next generation of printhead technology can now run up to $100 million or more (spread over a number of years) – raising the risks and rewards. The market dynamics are in piezo inkjet printheads favor; demand is there and it is easier to grow in growth markets than mature or declining ones. Ultimately success still comes down to individual manufacturer execution, but IT Strategies believes the odds are in favor of all the piezo inkjet head manufacturers that are not under development that they will be in business in one form or another during the next ten years.